Remittance inflows and corporate sales drive surplus supply on Uzbekistan’s FX market

Demand for foreign currency over the ten-month period reached $48.4 billion, up by 24% compared with the same period last year ($39 billion). The volume of supply (excluding Central Bank operations) amounted to $41.2 billion, which is 26.5% higher year-on-year.

The Central Bank noted that excess liquidity generated through the purchase of monetary gold was sterilized through the regulator’s foreign exchange operations and other monetary policy instruments.

Companies increased currency supply faster than demand

Demand from legal entities for foreign currency rose by 24% to $38.7 billion, while their foreign currency supply increased by 38% to $20.1 billion.

Export earnings of enterprises reached $14.5 billion (+18%), of which $8.1 billion (56%) was sold on the domestic market – a 23% increase compared to last year.

In addition, banks sold $7.3 billion on the domestic market from foreign loans they attracted – 62% more than in the same period last year.

Households sold $7.8 billion more foreign currency than they purchased

Citizens sold $17.4 billion to banks, 1.3 times more than last year. Meanwhile, households purchased $9.6 billion (+24%).

The positive balance of foreign exchange operations by individuals – $7.85 billion – became a significant additional source of supply on the market. This is almost 44% more than in the same period last year ($5.5 billion).

International money transfers played a key role: inflows reached $15.8 billion (+25%), while outflows fell to $2.2 billion (–$147 million).

Factors influencing the exchange rate

The Central Bank stated that the dynamics of the UZS exchange rate were shaped by the balance of supply and demand in the foreign exchange market, as well as external and macroeconomic factors.

The strengthening of the UZS was supported by growth in export revenues, an increase in foreign loans and remittances, stable imports, and higher levels of foreign investment.

Since the beginning of the year, the UZS has appreciated against the US dollar by 7.3% – from UZS 12,920.48 to UZS 11,971.4. For comparison, during the same period last year the national currency depreciated by 4.1%.